Since President Trump took office in January 2017, and even before that time in the run up to his inauguration, the controversial former businessman has been vocal about the US trading with China. As 2017 progressed, relations took a downward turn. The US launched an investigation into Chinese trade policies before imposing tariffs on numerous Chinese products. In response, China imposed tariffs of its own on US goods. The issue escalated with the US eventually imposing three rounds of tariffs on Chinese goods, in total worth more than $250 billion.
More recently, in December 2018, the two countries agreed to end the tariff stalemate with talks. Last week, on Thursday and Friday, China’s chief trade negotiator, Liu He visited Washington to talk about trade deals with Donald Trump. For many, news of these talks was a sign of better times ahead; there had been real fears that a long-term trade war between China and the US was in the pipeline and that this could have a detrimental and unsettling impact on world markets. Christine Lagarde, who is head of the International Monetary Fund, voiced these concerns when she said: “For us at the IMF, it’s imperative that trade tensions are resolved in a way satisfying for everyone, because clearly tensions between the US and China are a threat to the global economy.”
It may have looked as though things were about to improve but, in the countdown to the talks, on the previous Sunday and Monday, two events took place to suggest that these talks would be anything but plain sailing. Firstly, on the Sunday Trump exacerbated the situation by issuing a threat to raise tariffs again, this time from 10% to 25% on $200 billion of Chinese goods before the end of the week. The following day, Monday, US trade representative Robert Lighthizer added his voice to rising tensions when he suggested that China had not followed through with commitments made at earlier talks.
In response to these developments, on Tuesday, China’s foreign ministry spokesperson said: “Adding tariffs can’t resolve any problem. Talks are by their nature a process of discussion. It is normal for both sides to have differences. China won’t shun problems and is sincere about continuing talks.”
It was in this pessimistic climate that Liu He arrived in Washington. Perhaps unsurprisingly, the talks themselves were brief and by early afternoon on Friday they were concluded with no further face-to-face discussions scheduled. The two men leading the talks, Trump and Liu He, said respectively that the talks were ‘candid and constructive’ and that they went ‘fairly well.’
Ultimately however, the talks ended without a deal and with President Trump took to Twitter to suggest that an ongoing economic fight was just beginning. On Friday evening a statement was issued by the US trade representative to say that Trump had “ordered us to begin the process of raising tariffs on essentially all remaining imports from China, which are valued at approximately $300 billion.” As things stand, trade relations between China and the US are at an all-time low and there seems little chance of positive progress in the imminent future.
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